Analyze Improve Define Measure Control

Def

ine

LEAN SIX SIGMA

Lean Six Sigma History The Roots of Lean Six Sigma

Define

Learning Objectives Understand the market and workplace forces driving the

need for Lean Six Sigma

Understand the background and primary focus of Lean

Understand the background and primary focus of Six Sigma

Learn the tremendous benefits to be reaped by combining Lean and Six Sigma together

2

Define

A History of Manufacturing

Craft

Mass Production

Mass Customization

• Made to customer specifications • Each product unique • Pride in workmanship • Little inventory • Relatively high cost

• Whitney’s interchangeable parts • Taylor’s division of labor • Ford’s assembly line • Ford’s limited variety • Worker/management

division • High variety • Small volume per product • Near perfect quality • Engaged workforce

1875 1900 1925 1950 1975 2000

History shows customers value quality and variety, manufacturers desire efficiencies, and workers desire

satisfaction from their jobs.

3

Define

Traditional Performance Paradigm In the past, companies

believed a gain in one performance area required a trade off in one or more of the other dimensions.

For example, to decrease delivery time firms hired more expeditors, which drove up costs, while product quality suffered in the rush to get product out the door.

Shorter Delivery Times

Improved Product Quality

Lower Product

Costs

4

Define

New Performance Paradigm The new paradigm says a

performance gain in one area requires or will result in performance gains in the other dimensions.

For example, achieving a sustainable decrease in delivery time requires that rework, scrap, and other inefficiencies be eliminated in the production process, resulting in higher product quality and lower production costs.

Shorter Delivery Times

Improved Product Quality

Lower Product

Costs

5

Define

The Lean Six Sigma Strategy To implement the new paradigm,

companies turned to two major process improvement strategies – Lean and Six Sigma.

Lean focuses on reduced lead time and reduced costs.

Six Sigma focuses on improved quality and reduced costs.

Lean Six Sigma combines the benefits and power of both strategies.

Lean Six Sigma

Shorter Delivery Times

Improved Product Quality

Lower Product

Costs

6

Define Why Is Every Firm Driven to Both Quality and Lead Time Reductions? Customer loyalty and retention

Shorter customer lead time demands

Increased customer demands for small lots sizes and flexibility

Increased demand for capacity

Need for lower invested capital; higher financial returns

Downward price pressure; need to lower costs

7

Define Why Do These Goals Require Both Lean and Six Sigma?

Inconsistent product delivery and quality reduces sales

In a value stream, material spends 90% of its time waiting

Poor quality increases manufacturing lead time 10% scrap can increase lead time by 40% and reduces available capacity

Slow lead times reduce the rate of quality improvement

Capacity problems are masked by slow lead times

Lean tools accelerate lead time reduction…

… and Six Sigma brings a process under control

Lean Six Sigma optimizes capacity, reduces lead time, and eliminates variability in all processes

8

Define

Lean Production History Concept pioneered by Toyota

Adopted by other Japanese manufacturers

Discovered much later by Western manufacturers

Known by many names: Toyota Production System Just-In-Time Lean production

Originally focused on reducing waste in manufacturing

Now huge gains are being achieved by applying Lean to transactional and service environments

9

Define

Lean Thinking can be summarized in five principles*: Principle 1 – Specify and Focus on value Principle 2 – Identify the value stream Principle 3 – Allow value to flow without interruptions Principle 4 – Let the customer pull value Principle 5 – Continuously pursue perfection

* Womack, J. P. and D. T. Jones, 1996, Lean Thinking, Simon & Schuster

The Five Principles Of Lean Thinking

10

Define

Our goal is to eliminate NVA activities wherever possible and minimize the BVAs through the use of Lean Methods.

Definition Of Value “Any activity or task that transforms the “deliverables” of a

process in such a way that the customer is both aware of it and willing to pay for it, is value added”

Based on this (strict) definition of value, we can divide the tasks and activities of any process into three categories: Value added (essential) or VA Business value added (BVA) Non-value added (NVA)

11

Define

Definitions – Activity Types Value added

Any activity or task that transforms the deliverables of a process in such a way that the client is aware of it and is willing to pay for it Any activity that, when left out, would impact product performance and/or customer satisfaction

Business Value added

Necessary to support value added steps in the current process Includes those activities that do not add value but are currently required by regulation or law When left out, may not directly impact the customer or incur dissatisfaction

Non-Value added

Any activity that, when left out, does not directly impact the customer or the business

12

Define

Value Added Quiz In which category should the following activities be placed?

Activity VA BVA NVA 1) Attending a weekly team coordination meeting 2) Filtering through your daily e-mail list 3) Reporting status to upper management 4) Gaining multiple approvals on documents 5) Gaining management approval for routine actions 6) Expediting a document through the approval list 7) Writing formal policies and procedures 8) Writing brief work-method instructions 9) Gaining agency approvals – Not legally binding 10) Creating ISO 9000 documentation 11) Hunting for needed information to do your job 12) Building a “best practices” database 13) Holding a lessons learned meeting 14) Assigning a tracking number to a shipment

13

Define Lean Focuses on Eliminating the Eight Deadly Wastes (TIMWOODU) Waste in Transportation

Waste of Inventory (Excess Stock on Hand)

Waste of Movement (Excess Worker Motion)

Waste of Waiting (Idle Time)

Waste of Overproduction (Currently Unneeded Stock)

Waste of Over Processing (Misused Capacity)

Waste of Defective Products

Waste of Unused Human Intellect

The Eight Deadly Wastes are inherent in EVERY process – Lean provides the methodology, tools, and techniques to reduce and eliminate them!

14

Define

Lean Tools and Terminology Setup Time Reduction

Total Productive Maintenance

Process Balancing

Process Flow Improvement

Mistake Proofing

Visual Control Tools

Sales & Operations Planning

Value Stream Mapping

Time Trap Analysis

Generic Pull Systems

Replenishment Pull

Analytical Batch Sizing

Stocking Strategy

5S

Goals: Highest Quality, Lowest Cost, Shortest Lead Time

15

Define

Takt – German for “meter”; refers to the tempo set by the conductor of an orchestra

Used in “Just-In-Time” processes to set the rate of production equal to the average customer demand

Takt Time = Available Work Time/Period* Customer Demand/Period*

Producing slower then takt time = we don’t meet customer demand

Producing faster then takt time = we overproduce, create inventory

*Period must be consistent (i.e.., Shift,Day,Week)

Lean Terminology Takt Time

16

Define

Takt Time = Available Work Time/Day Customer Demand/Day Work Time/Day 1 Day = 1 Shift = 480 minutes 480 Breaks: 2 @ 15 minutes -30 Clean-ups: 1 @ 5 minute -5 Work Time minutes/Day 445 Customer Demand/Day Monthly Demand (units) 4500 Number of working days/month 20 Customer Demand/day (4500/20) = 225 Takt Time = (445 mins/day)/(225 units/day) = 1.98 mins/unit

Takt Time Example

17

Define

For Business Processes, Takt time could represent the time available to perform a given process step, based on the

total number of steps that must be completed in a work day

Available Work Time per Work Period

Number of Process Steps Required per Work Period (To Meet Demand of Process Customer)

Takt Time =

Ensures all required work is completed every day

Concept Of Takt Time For Business Processes

18

Define

Six Sigma History Motorola was the first advocate in the 80’s; gathered momentum in

late 80’s/early 90’s

Six Sigma involves use of statistical tools and structured problem-solving approach to attack high payback projects

Project implementers called “Black Belts,” “Top Guns,” “Change Agents,” and “Trailblazers”

Implementers expected to deliver annual financial benefits through 3-6 projects per year

Companies embracing Six Sigma include GE, Allied Signal, Sony, ITT, Caterpillar, and Bombardier

19

Define

Six Sigma Terminology “Sigma” (σ) = Standard Deviation

Key measure of Variability Emphasizes need to control both the average and variability of a

process

Six Sigma Quality “Sigma Quality Level” (SQL) measure used to indicate how often

defects are likely to occur Realization that 99% Yield is not good enough Six Sigma Quality = 3.4 Defects per Million Opportunities (DPMOs)

20

Define

Goals Of Six Sigma

21

Define

Variation Kills

Customers are extremely sensitive to variation

Variation reduces overall confidence level in the

process

How do you feel if security screening is just a little

different in every airport?

Customers feel the variation NOT the average 22

Define

Is 99% Good Enough? 99% Good (3.8 Sigma) 99.99966% Good (6

Sigma) 20,000 lost articles of mail per hour (based on 2,000,000/hr)

Seven articles lost per hour

Unsafe drinking water for almost 15 minutes each day

One unsafe minute every seven months

5,000 incorrect surgical operations per week

1.7 incorrect operations per week

Two short or long landings daily at an airport with 200 flights/day

One short or long landing every five years

2,000,000 wrong drug prescriptions each year

680 wrong prescriptions per year

No electricity for almost seven hours each month

One hour without electricity every 34 years

23

Define

Can We Inspect Our Way To 6 Sigma? DPMOlt

2 308,537 3 66,807 4 6,210 5 233 6 3.4

Process Capability Defects per Million Opportunities

Inspection can only get us so far.

σst

24

Define

Count the number of times the 6th letter of the alphabet appears in the following text:

The necessity of training farm hands for first class farms in the fatherly handling of farm livestock is foremost in the eyes of farm owners. Since the forefathers of the farm owners trained the farm hands for first class farms in the fatherly handling of farm livestock, the farm owners feel they should carry on with the family tradition of training farm hands of first class farmers in the fatherly handling of farm livestock because they believe it is the basis of good fundamental farm management.

The Inspection Exercise

25

Define

Rolled Throughput Yield (RTY) is the probability that a product will pass through the entire process without rework and without any defects.

Impact of Complexity on Rolled Throughput Yield

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Number of Parts/Process Steps

Rolle

d Th

roug

hput

Yiel

d

4σ

5σ

6σ

Why Six Sigma Is the Goal

For complex products and systems requiring 1,000s of process steps, 6σ is necessary to produce or perform defect-free more than 90% of the time

RTY= Y1 x Y2 . . . Yn (n = number of process steps)

26

Define

Six Sigma Results GE annual reports state that Six Sigma delivered:

$300 million to its operating income in 1997 $750 million to the bottom line in 1998

Additional annual report examples: 10-fold increase in life of CT scanner x-ray tubes Improved yields of super-abrasives – worth a full decade of

increased capacity despite growing demands 62% reduction in turn-around time of railcar leasing repairs Plastics business added 300 million pounds of new capacity –

equivalent to “one free plant”

27

Define Six Sigma 1.0 – Improving Process Performance Six Sigma defined as a method to eliminate variation to

customer requirements 4-Step Measure Analyze Improve Control (MAIC) methodology Concept of Y = f(x1, x2, …) introduced to drive focus on

improving critical process inputs rather than just outputs (sales, profits, etc.)

Supported by a suite of quality/statistical analysis tools

Execution

28

Define

Six Sigma 2.0 – Management Infrastructure Six Sigma effectiveness enhanced by strengthening the

management infrastructure needed to execute business strategy: Define-Measure-Analyze-Improve-Control (DMAIC) Business Leaders trained and actively engaged in the process Projects selected specifically to support business objectives Defined organization and set of roles (Black Belts, Champions,

Sponsors, Green Belts, etc.) creates accountability Critical mass of resources deployed (Set % of employee

population)

Commitment

Execution

Building Infrastructure

29

Define

Strategy Integration

Quality of Thinking

Commitment

Focus

Execution

Building Infrastructure

Six Sigma 3.0 – Value Based Lean Six Sigma Six Sigma strategic focus sharpened and Lean added to

specifically focus on ROC and to enable process speed “Define” phase added to enhance project selection and team launch

processes resulting in “DMAIC” Value Based Project Selection process and rigorous system of

projects-in-process management Integration of Lean tools with Six Sigma to remove waste from non-

value added processes and drive speed

30

Define

The Lean Six Sigma Concept

Combine the strategy and solution sets inherent in Lean with the cultural, organizational process and

analytical tools of Six Sigma.

With the result that we …

respond to our customers better, faster w ith less waste

Six Sigma Lean

31

Define

Six Sigma and Lean Contributions Six Sigma is the “Unifying Framework”

Six Sigma provides the over-riding methodology (DMAIC and DMEDI/DFSS)

Six Sigma provides the improvement infrastructure Six Sigma provides the burning platform for improvement

Lean provides: Key measure and analyze tools to visualize problems and

pin-point where to improve Powerful improvement tools to “turbo-charge” improvement

efforts by reducing waste and increasing process speed

32

Define Lean and Six Sigma Are Essential for the Success of Your Company

Goal – Reduce waste and increase process speed

Focus – Bias for action/ Implementing Toyota tools

Method – Kaizen events, Value Stream Mapping

Goal – Improve performance on Customer CTQs

Focus – Use DMAIC with TQM tools to eliminate variation

Method – Management engagement, 1% dedicated as Champions and Black Belts

Six Sigma Quality, Cost +

Explicit Infrastructure

Lean Speed + Waste +

Implicit Infrastructure

Six Sigma Quality Enables Lean Speed

(Fewer Defects Means Less Time Spent on Rework)

Lean Speed Enables Six Sigma Quality

(Faster Cycles of Experimentation/learning)

33

Define Six Sigma Improves Quality, Lean Eliminates Non-Value-Add Steps – Both Are Required!

# of Parts ±3σ ±4σ ±5σ ±6σor Steps

1 93.32% 99.38% 99.98% 99.9997%2 87.08% 98.76% 99.95% 99.9993%3 81.27% 98.15% 99.93% 99.9990%4 75.84% 97.54% 99.91% 99.9986%5 70.77% 96.93% 99.88% 99.9983%

10 50.09% 93.96% 99.77% 99.9966%30 12.56% 82.96% 99.30% 99.9898%50 3.15% 73.24% 98.84% 99.9830%

100 0.10% 53.64% 97.70% 99.9660%300 15.43% 93.26% 99.8980%500 4.44% 89.02% 99.8301%

1,000 0.20% 79.24% 99.6605%3,000 49.75% 98.9849%5,000 31.24% 98.3140%

10,000 9.76% 96.6564%

Six Sigma Improves Quality of Value Add Steps

Lean

Red

uces

Non

-Val

ued

Add

Ste

ps

34

Define

Improve

Lean Six Sigma DMAIC Improvement Process Road Map

• Review Project Charter • Validate Problem Statement

and Goals • Validate Voice of the Customer

& Voice of the Business • Validate Financial Benefits • Validate High-Level Value

Stream Map and Scope • Create Communication Plan • Select and Launch Team • Develop Project Schedule • Complete Define Gate

• Identify Potential Root Causes

• Reduce List of Potential Root Causes

• Confirm Root Cause to Output Relationship

• Estimate Impact of Root Causes on Key Outputs

• Prioritize Root Causes • Complete Analyze Gate

• Develop Potential Solutions • Evaluate, Select, and Optimize

Best Solutions • Develop ‘To-Be’ Value Stream

Map(s) • Develop and Implement Pilot

Solution • Confirm Attainment of Project

Goals • Develop Full Scale

Implementation Plan • Complete Improve Gate

• Implement Mistake Proofing • Develop SOP’s, Training Plan

& Process Controls • Implement Solution and

Ongoing Process Measurements

• Identify Project Replication Opportunities

• Complete Control Gate • Transition Project to Process

Owner

• Project Charter • Voice of the Customer and

Kano Analysis • SIPOC Map • Project Valuation / ROIC

Analysis Tools • RACI and Quad Charts • Stakeholder Analysis • Communication Plan • Effective Meeting Tools • Inquiry and Advocacy Skills • Time Lines, Milestones,

and Gantt Charting • Pareto Analysis • Belbin Analysis

• Value Stream Mapping • Value of Speed (Process Cycle

Efficiency / Little’s Law) • Operational Definitions • Data Collection Plan • Statistical Sampling • Measurement System Analysis

(MSA) • Gage R&R • Kappa Studies • Control Charts • Histograms • Normality Test • Process Capability Analysis

• Process Constraint ID and Takt Time Analysis

• Cause & Effect Analysis • FMEA • Hypothesis Tests/Conf. Intervals • Simple & Multiple Regression • ANOVA • Components of Variation • Conquering Product and

Process Complexity • Queuing Theory

• Replenishment Pull/Kanban • Stocking Strategy • Process Flow Improvement • Process Balancing • Analytical Batch Sizing • Total Productive Maintenance • Design of Experiments (DOE) • Solution Selection Matrix • Piloting and Simulation

• Mistake-Proofing/ Zero Defects

• Standard Operating Procedures (SOP’s)

• Process Control Plans • Visual Process Control Tools • Statistical Process Controls

(SPC) • Solution Replication • Project Transition Model • Team Feedback Session

• Value Stream Map for Deeper Understanding and Focus

• Identify Key Input, Process and Output Metrics

• Develop Operational Definitions • Develop Data Collection Plan • Validate Measurement System • Collect Baseline Data • Determine Process Capability • Complete Measure Gate

Tools

Activities

Analyze Control Measure Define

Kaizen, 5S, NVA Analysis, Generic Pull Systems,

Four Step Rapid Setup Method

Identify and Implement Quick Improvements with Kaizen

35

Define

Six Sigma and Lean Are not mutually exclusive

Not only are they not mutually exclusive, they…

Are compatible Not only are they compatible, they…

Are complementary Not only are they complementary, they…

Are enablers of each other Not only are they enablers of each other, they…

Are in many cases necessary conditions of each other

36

Define Lean Six Sigma Must Be Applied to All Processes, Not Just Manufacturing

Customer Facing Processes Pricing/Quotations Order Management Customer Service Accounts Receivable

Internal Business Processes Engineering Change Notice Cycle Production Scheduling Cycle

All Can and Should Be Attacked Using Lean Six Sigma Quality and Time Tools

37

Define

Lean AND Six Sigma

“It’s not Six Sigma or Lean, it’s not Six Sigma then Lean,

it’s Six Sigma and Lean” – Mike Joyce, VP LM 21

Lockheed-Martin

38

Define Lean Six Sigma Employs the Evolved Deployment Model for Success

Strategy Integration

Quality of Thinking

Commitment

Focus

Execution

Building Infrastructure

• Train Black Belts and Green Belts in Lean Six Sigma DMAIC and Team Leadership

• Implement a “Projects in Process” management system and stage gating

• Train Project Sponsors to ensure accountability and long-term results

• Leverage experts to support reduction of offering complexity

• Train Business Leaders to use a rigorous Value Based Project Selection process

• Analyze each business to understand relative opportunity of process improvement vs. offering complexity reduction

• Rapidly deploy the best people as Black Belts in a critical mass

• Create an effective organization of improvement resources in line organizations

• Implement a rigorous process for measurement and tracking of project financial results

• Integrate Lean Six Sigma into the daily management practices of the business

39

Define Six Sigma 4.0 – Conquering Complexity Lean Six Sigma currently being extended to quantify and attack the

cost driven by complexity of the product/service offering Our latest research indicates that Product/Service Complexity is often

the greatest creator of Non Value Add waste and quality problems. Product/Service Complexity comes in three forms:

Offerings which earn adequate ROC Offerings which do not earn adequate ROC:

Improvement Rationalization

Offerings may have complexity that is transparent to the customer Often due to historical design evolution Standardization is required

Conquering Complexity – The Next Lean Six Sigma Frontier

40

Define

Exercise Elevator Speech An elevator speech refers to what a leader would say should he or she get on

a elevator with a peer or subordinate who asks about Lean Six Sigma

Within 90 seconds an executive would have to be able to comment briefly on What Lean Six Sigma is Why Grace is embracing Lean Six Sigma as a management philosophy What are the benefits of Lean Six Sigma What is expected from the peer or subordinate relative to Lean Six Sigma

As a group or in different teams you will now create an elevator speech that you would be able to use at Grace (15’ max) It must be high energy, motivating without any hype It must allow the subordinate to feel good about the initiative and/or take

his fears away

You can find an example of an elevator speech on the next slide in case you need some inspiration to get started

41

Define Exercise Elevator Speech Example

Lean Six Sigma is the management philosophy we have adopted to become a more effective, efficient organization. It is an approach for us to identify the customers throughout our business, find out their needs and requirements, measure our current performance, and empower our employees to find ways to improve performance. Successful Lean Six Sigma performance will result in greater customer satisfaction, which will result in keeping current customers and finding new ones. It empowers employees to improve processes they work in which will result in greater satisfaction. Your role in Lean Six Sigma is crucial. You will be expected to learn how to measure key variables that drive performance in processes you work in and find out about ways to improve process. When you do, you will find greater work performance, greater work life balance, and less stress in your job.

42

Define

Takeaways A quick history of Lean Six Sigma

43